[Reporter’s Notebook] What Did the "Sage of Omaha" Foresee?

Recently, there has been a chilling development for Seohak Ants (Korean individual investors investing in U.S. stocks). It is the 'liquidation' by Warren Buffett, known as the investment genius. As of the end of last year, Berkshire Hathaway's cash and cash equivalents amounted to $334 billion. This is approximately 480 trillion KRW, the largest amount ever. It is enough to buy Samsung Electronics, with a market capitalization of 380 trillion KRW, in cash. Various risk signals confirmed by U.S. economic indicators are also increasing investors' concerns. What did the 'Sage of Omaha' foresee?

Looking at Buffett's portfolio, there are a few notable points. One is that he has sold off a large number of financial stocks. Buffett prefers companies with solid financial structures and active shareholder returns. Nevertheless, last year he reduced his Bank of America (BoA) shares by about 15%. He sold as much as 73% of his Citigroup shares. Since Buffett, who loves dividends so much, gave up on them and sold cyclical financial stocks, it is not surprising that pessimism about the U.S. economy is emerging.

Last year, Buffett also sold all of his shares in VOO and SPY, U.S. ETFs tracking the S&P 500 index. This is notable because he once advised his wife to invest 90% of his inheritance in S&P 500 index-tracking ETFs after his passing, showing his faith in index investing. This supports the view that it will be difficult for the U.S. stock market to perform as well this year as it did last year. While selling his beloved stocks, Buffett bought shares in consumer goods and oil companies such as pizza, beer, and radio. This has even led to some joking speculation that he might be preparing for a U.S. civil war.

With all sorts of speculation and conspiracy theories surrounding Buffett's moves, investors' calculations are likely to become more complicated. Is Buffett truly preparing his final 'bet' anticipating a crash in the U.S. stock market? Or is he simply organizing his affairs so that his successor can cultivate a portfolio suitable for the 'post-Buffett' era?

One thing is certain: Buffett is human and makes mistakes. The Berkshire Hathaway shareholder letter released last week mentioned the word 'mistake' 13 times. Buffett, who regretted investing in IBM instead of Google or Amazon in the past, admitted that he sometimes misjudges a company's economics and fails in investments. No matter how great a figure in the investment world is, if you give too much meaning to their words and actions and get swept away, you lose sight of the essence. In these days when the global stock market fluctuates with the daily flood of news, it seems the time has come to steadfastly maintain your own investment philosophy without being swayed by what others say.